This is a very rare bug and the chance to experience this problem isn’t very big, but I hope it will save the hair pulling for someone :)
The problem manifests itself in products -> edit -> images. There, when you click on the “Browse” button to locate the image on your local PC, nothing happens and the browse window doesn’t appear. It only happens when using Windows (Mac and Linux users are still safe) and is caused by the flash plugin for your browser. At the moment it is confirmed for Firefox (2 and 3) as well as IE7. The symptom is an error similar to this one in your Firefox error console (Tools -> Error Console or Ctrl + Shift + J):
throw new Error(myErrorMessage[1]);
Source file: “/js/lib/flex.js ”
The only solution at the moment is to install FlashPlayer 10, then download and install FlashPlayer9. Remove your Flash/activeX plugin using this link. Then install the old flash9 version using this.